Friday, December 9, 2011

Economy Is Not a Science

On Saturday, December 10, this year's Nobel Prize laureates will receive their prizes from the Swedish king. Among those are two winners of the Economy Prize, which is not a real Nobel Prize – fittingly, since it's not a real science.

14 comments:

Hola Stefan,Just read that in Facebook :"Economy is the basis of society. When the economy is stable, society develops. The ideal economy combines the spiritual and the material, and the best commodities to trade in are sincerity and love."O'Sensei Morihei Ueshiba

hahaha, I'm sorry Stefan I thought you knew that I'm Carina, ok now another reply to what is science, I like it and came to it through a post of LinTal in Aikiweb http://www.youtube.com/watch?v=9Cd36WJ79z4&feature=relmfu

Carina, sadly many of the wealthy seem to live under the impression that they can buy all three.

To some extent they seem superficially to be right. Money is indeed a shortcut to the most advanced medical treatments we have today. As for happiness, I am reminded of Liberace's words: "I cry all the way to the bank." Regarding love, well, money seems to be a powerful afrodisiac.

I think the key lies in contentment. No luxury in the world guarentees that you feel content. Actually, the more you have, the more this lack itches in your soul.

The first comment on Economics is Homer. "All Phonecians are fine sailors but all are rogues". The Phonecians were the merchants of his period. His conclusion "All were rogues". Has anything changed?

50% of all economics is in the heads of men. Economics is based in the minds of men, i.e. "Sell hight, buy low". There is no justice in economics; only when it comes to bills.

In the Republic sec 426 e, Socrates said "...and are perpetually expecting to find a way of putting an end to frauds in business and in the other matters of which I was speaking because they can't see that they are in ver truth trying to cut off a Hydra's head."

So very true. In the Laws, Plato calls retail, Huckstering. Socrates also in the Republic says, "Where money is prized, Virtue is despised". (Republic sec 550-551 Jowett trans) This is why the Spartans were not allowed in the agora. Were not allowed money. This is true. The Spartans were a warrior society based on Honor. A mercantile society like Athens, can not run on virtue. Business is like war, it is about undercutting your fellow man, in order to make a buck. Most of the parameters of economics exist solely in the minds of men and feeds off their lust.

Another facter in economics is "gaming the system". Every bubble greated in economic history is about somebody somewhere cooking the books.

We are in the Great Depression now! We are in the mother of all Depressions--it has yet to get full blown.

This started in the Mortgage Industry where they created a "financial derivative" called a "Credit Default swap". These were bundled mortgages sold to other creditors all for the sake of creating "insurance". The money was made off the commissions! People jumped on the band wagon--wanting a piece of the pie. Mortgages are solid right? These things were sold and resold.

There are some $600 TRILLION of this stuff floating around! Iceland banks failed. All the banks are failing across Europe. Markers are being called in.

These "Credit default Swaps" is what is called "gaming the System". They gamed the system. Once one person is making money, others jump on like in a Gold Rush, and make money. Everybody made money---if they bought and sold it for others. The middlemen made out. You can't stop that. They made over $600 Trillion in junk bonds.

The collapse of MF Global is another good one. It is also connected to the Mortgage CDO Bubble in another way. There is a war going on between banking houses, markers are being called, and there is no money to pay. What part of "Economic Science" is there to Banking Cartel Wars?

And then people try to put other people out of business and knock out the competititon. "Gaming the System" and Mercantile/Banking Wars are all part of economics---but never covered by "economic science"!

We are heading for the mother of all Depressions. It won't look pretty. It will make the Wiemar look tame by comparison.

Hi Stefan, unfortunately you are right in most cases, the good news is that not all of us are like that, perhaps because we don't have money.About the great depression WLW is talking, I'd like to share the point of view of my compatriot Adrian Salbuchi, it is in english and really worth to listen http://fr.sott.net/articles/show/5276-L-effondrement-financier-mondial-vu-par-l-Argentin-Adrian-Salbuchi

""MF Global's bankruptcy revelations concerning missing client money suggest that funds were not inadvertently misplaced or gobbled up in MF's dying hours, but were instead appropriated as part of a mass Wall St manipulation of brokerage rules that allowed for the wholesale acquisition and sale of client funds through re-hypothecation. A loophole appears to have allowed MF Global, and many others, to use its own clients' funds to finance an enormous $6.2 billion Eurozone repo bet."

The whole article is really an eye-openener on what is going on. "Re-hypothecation"? What kind of word is this; is this hocus-pocus time? MF Global engaged in a monetizing bubble of extreme proportions. They also had a rule that Client's money is not safe--that client money can be used to do whatever the company needed it to do. The clients got raped, raped.

The whole thing is scandalous. There is no such thing as economics. Government is picking who loses and wins; friends get bailed out.

Maybe the bottom line is that business is allowed to substitute ethics with profit. I object to the idea that all citizens are expected to work for society as a whole - at least not against it - whereas business is allowed not to care. Instead, we should demand much more of companies than we do of individuals.

"To lower the budget deficit the Greek government moved all sorts of expenses (pensions, defense expenditures) off the books. To lower Greek inflation the government did things like freeze prices for electricity and water and other government-supplied goods, and cut taxes on gas, alcohol, and tobacco. Greek-government statisticians did things like remove (high-priced) tomatoes from the consumer price index on the day inflation was measured."

Here, honesty and virtue and truth telling are nowhere near the government's actions. Economics can not work without virtue.

That quote comes from an article by Michael Lewis. The whole state of Greece is something scandalous. It is quite disturbing. It is Beware of Greeks bearing bonds. It is eight pages long and well-worth the read. It is extremely informative and descriptive of Greek behavior and culture.

I worked at a small "Christian" College in Kentucky. The department I worked in was the Blacksmithing shop. We made items and they were sold thru the campus shop or online thru a catalog. I was told that they had to show a loss every year in order to continue getting tax breaks. Fancy accounting in order to skirt some overbearing Tax burden.

I also worked in another small business and knew the owners. They also had to legitimately find loopholes in order to stay in business.

My take is that onerous Government taxation and regulations forces businesses NOT to be honest. Honesty can not be done in the business world--or you are put out of business. That's a plane fact. More than half of the trouble is the government and its tax burden.

Economics would be okay if Virtue is allowed. Virtue is not something that is economically feasible. Anyway Virtue is a Warrior/Aristocratic value unwelcome and underwater in an Economic situation.

WLW, virtue was the word I was searching for. Although having translated Tao Te Ching, I didn't find it...

As for the Euro experiment, I guess its big anomaly is that it depends on all member nations being loyal to its principles, but there's no way to guarantee that loyalty - since every member nation government wants to keep the ability to cheat.

About Me

I'm an author, artist, historian of ideas, and aikido instructor. I have also worked as a journalist for Swedish newspapers. I was a literature critic in Aftonbladet, a rock and theater critic in Dagens Nyheter, and the secret restaurant critic in Sydsvenskan. As an historian of ideas at Lund University, I write a dissertation on the thought patterns in creation myths.

My books are both fiction and non-fiction. Among the latter are books about Taoism, aikido, Tarot, mythology, and astrology. Some of them are only in Swedish, but I have written an increasing number of books in English.